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Wednesday, February 16, 2005

China, India : Emerging Giants In Mobile Infrastructure And Applications

(Via Thefeature) The western mobile industry typically thinks of India and China in terms of opportunity - but the reality is that they are an increasing threat as well. With a combined population of up to 3 billion and rapid predicted growth in mobile usage,much of the talk at 3GSM is about the opportunity in India and China. In the Chinese handset market, domestic vendors now claim over 50% of the market. Excerpts with edits:
There are four main reasons why the Indian and Chinese vendors are looking to export.

- One, government initiatives exist in both countries to create global players. As is widely known, both China and India have clear long-term IT growth plans.
- Two, they are using the expertise created in the country, partly by the joint ventures with Western vendors, to create export opportunities. In China, this is known as the "inside-out" strategy: building up a strong domestic player and then moving into international markets. These domestic players have already become strong, as shown by their ability to lead joint ventures
- Three, they are looking to escape increasingly intense domestic competition. It is not just Western vendors who have faced margin and market share pressure, particularly in China, over the last several years. Domestic vendors also want to grow and diversify.
- Four, the Chinese and Indian vendors see demand from international markets. It is falsely assumed this is always at the low-end and low-cost part of the market, although this is sometimes a starting point. Sometimes it is in similar markets, which are either at comparable stages of development or are close geographically and culturally.
- Three of China's largest infrastructure players. Huawei, UTStarcom and ZTE earned around 1% of their revenues outside China in 2000; in 2004, the figure is expected to be around 33%. Chinese researchers Norson Consulting expect this proportion to rise to 70% for Huawei, and 80% for both UTStarcom and ZTE by 2008. The majority of international sales for Huawei and ZTE are in mobile infrastructure.

There are three specific areas in which Indian vendors are likely to become international and global players.
- The first is the development of mobile applications and software by Indian software and outsourcing titans such as Wipro, Satyam and Infosys. These companies already have a global presence and will use demand in India as a basis for international expansion.

- The second is in specific mobile applications areas where Indian companies believe they an edge. Two examples are gaming and mobile Linux.

- The third area are national and governmental awards and campaigns to foster the development of global players from India.

Western vendors still tend to be somewhat arrogant about the potential threat from Chinese and Indian vendors. Looking specifically at the threat from Chinese infrastructure vendors, they assume they will lose only business in emerging markets, where the deal is so cheap that they would not want the business, and where the infrastructure is not critical. The first assumption is becoming less true, as it is emerging markets where the Western vendors expect to see growth in 2005 and beyond. The threat from Chinese and Indian vendors varies by market sector and by region, but it is growing, and will be a major competitive factor in the global mobile sector in many markets within the next several years.The mobile market shall definitely see the emergence of chinese/indian giants.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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